Case Details: Real Strips Ltd. vs. Commissioner of Central Excise-II (2025) 37 Centax 115 (Guj.)
Judiciary and Counsel Details
- Bhargav D. Karia & Pranav Trivedi, JJ.
- S/Shri Sudhanshu Bissa for Paresh M. Dave, for the Appellant.
- Shri Hetvi H. Sancheti, for the Respondent.
Facts of the Case
The assessee, being a manufacturer, had availed Cenvat credit of Service Tax paid on services relating to installation, commissioning, civil works and maintenance of a windmill located at Kutch, which was used for the generation of electricity. The electricity so generated was fed into the State Government grid, and, in turn, equivalent electricity was supplied back to the assessee for use in its factory situated at Ahmedabad for manufacturing and allied operations. The Department denied the Cenvat credit on the ground that the windmill was located outside the factory premises, that the services were used at a location other than the place of manufacture, and that the electricity generated at the windmill site was not an excisable good. The assessee submitted that the windmill was exclusively used in relation to its manufacturing activity and that there was no requirement under the Cenvat Credit Rules, 2004, mandating that input services must be received or used within the factory premises. The matter was accordingly placed before the Gujarat High Court.
High Court Held
The Gujarat High Court held that services used for installation, commissioning, civil works and maintenance of windmills exclusively deployed for generating electricity used in manufacturing activities satisfied the definition of ‘input service’ under rule 2(l) read with rule 4 of the Cenvat Credit Rules, 2004. The Court interpreted the statutory provisions to mean that there was no stipulation requiring a manufacturer to receive or consume input services strictly within the factory premises for availing Cenvat credit. Applying the law to the facts, it was held that the generation of electricity through windmills and its subsequent use in the factory via the State Government grid constituted an activity integrally connected with manufacturing. The Court, therefore, rejected the reasoning adopted by the tribunal and held that the assessee was entitled to Cenvat credit of the Service Tax paid on the said services, and the appeal was allowed in favour of the assessee.
List of Cases Reviewed
- Real Strips Ltd. — Appeal No. E/1035/2010, dated 25-3-2011 by CESTAT, Ahmedabad — Reversed [Paras 2, 11]
List of Cases Cited
- Atul Auto Ltd. v. Commissioner — 2009 (237) E.L.T. 102 (Tribunal) = 2010 (20) S.T.R. 275 (Tribunal) — Referred [Para 10]
- Commissioner v. Ashok Leyland Ltd. — 2019 (369) E.L.T. 162 (Mad.) — Referred [Para 14]
- Commissioner v. Endurance Technology Pvt. Ltd. — 2017 (52) S.T.R. 361 (Bom.) — Referred [Para 14]
- Commissioner v. Excel Crop Care Ltd. — 2008 (12) S.T.R. 436 (Guj.) — Referred [Paras 14, 15]
- Endurance Technologies Pvt. Ltd. v. Commissioner — 2011 (273) E.L.T. 248 (Tribunal) = 2012 (27) S.T.R. 320 (Tribunal) — Referred [Para 14]
- Parry Engineering & Electronics Pvt. Ltd. v. Commissioner — 2015 (40) S.T.R. 243 (Tribunal-LB) — Referred [Para 14]
- Rajhans Metals Pvt. Ltd. v. Commissioner — 2007 (8) S.T.R. 498 (Tribunal) — Referred [Para 10]
- Rajhans Metals Pvt. Ltd. v. Commissioner — (2025) 37 Centax 127 (Guj.) — Applied [Para 18]
- Real Strips Ltd. v. Commissioner — 2015 (39) S.T.R. J36 (Guj.) — Referred [Para 3]
